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No candidate yet has offered a real debt-reduction plan

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Monday September 12, 2011 6:08 AM

Throughout the 2010 campaign, House
Speaker John Boehner kept saying he wanted an “adult conversation’’ with Americans about the
exploding federal deficit and growth of the entitlement programs of Medicare, Medicaid and Social
Security.

Unfortunately, the Republican presidential candidates don’t appear quite ready to take part in
that conversation.

Their economic plans seem to be heavy on tax cuts and vague on spending reductions. It seems the
GOP contenders are not quite ready to level with the American people.

Not that the Democrats are much better. President Barack Obama remains haunted by his 2008
pledge not to raise taxes on any family earning less than $250,000 a year. With that pledge, he has
made it all but impossible for the federal government to raise enough money to balance the
budget.

Among the GOP contenders, former Massachusetts Gov. Mitt Romney and former Utah Gov. Jon
Huntsman have offered the most detailed plans. Give them credit for saying what they want to do.
But don’t kid yourself into believing their ideas would reduce the deficit.

Last week in Nevada, Romney said he wants to cut the corporate tax rate, kill the estate tax and
end taxes on dividends and capital gains for people earning less than $200,000 a year.

Huntsman backs a plan that economic conservatives really love: He would scrap the current tax
code and replace it with three income tax rates of 8 percent, 14 percent and 23 percent. He would
finance his plan by eliminating scores of deductions.

The other contenders have clearly signaled their gusto for tax cuts. Texas Gov. Rick Perry said
that Americans want a president who is “going to lower the tax burden on you.’’ Republican Rep.
Michele Bachmann of Minnesota wants to eliminate taxes on capital gains. Texas Rep. Ron Paul wants
to kill both the income tax and the Internal Revenue Service.

“What makes it difficult is politicians are not leading the way,’’ said Robert Bixby, executive
director of the Concord Coalition, a Washington nonpartisan organization that favors lower
deficits. “If they are going to pander to partisan interests, that makes it difficult to have a
serious conversation.”

The latest projections from the nonpartisan Congressional Budget Office show that cutting taxes
simply will not balance the budget. Last month, the CBO predicted that the annual deficit would
tumble to $205 billion by 2015, provided Congress does something nobody expects.

That would include allowing the Bush-era tax cuts for all Americans to expire and cutting
Medicare provider payments by $300 billion. If neither is done, the deficit soars out of
control.

Why? It has nothing to do with the 2008 financial bailout, which adds just $23 billion to the
federal debt over the next decade. Instead, check just two programs: Medicare, which pays the
health costs for the elderly, and Medicaid, which covers health costs for the poor.

The CBO shows that Medicare spending leaps from $555 billion this year to $966 billion in 2021,
while Medicaid jumps from $274 billion this year to $561 billion by 2021.

In 2021, federal spending for all health programs will reach $1.7 trillion, nearly double today’s
spending for the same programs. To quote the late economist Herb Stein, “If something cannot go on
forever, it will stop.’’

We are in this predicament precisely because for three decades, politicians have chosen to
ignore the laws of mathematics. In 1981, President Ronald Reagan pushed through Congress a major
cut in income taxes despite warnings it would increase the deficit.

In 2001, President George W. Bush won congressional approval for a huge tax cut despite warnings
that it would wipe out a projected budget surplus. And in 2009, Obama persuaded lawmakers to
approve a $787 billion economic stimulus package despite warnings it would increase the
deficit.

The definition of insanity is doing the same thing over and over and expecting a different
result.

We are now going to find out if American voters will buy into this thinking yet another
time.